Investors not online with the e-commerce push

E-commerce is said to be the promised land, but it has yet to receive much interest from local investment funds.

“Vietnam has a very good foundation that is ready for further growth, with strong demand, an educated workforce and growing tech sophistication,” said DFJ VinaCapital director Hoang Duc Trung.

Trung said consumption potential was promising, around 70 per cent of Vietnamese people’s income, which was $1,200 per capita per annum and was expected to double in the next seven to 10 years.

Vietnam is the 17th most active country in terms of internet usage in the world, with around 29 per cent of the Vietnamese population using the internet, according to a recent survey conducted by the World Bank.

Some investment funds agreed that now was a good time for e-commerce, an important channel to support retailers and to distribute products to customers and businesses.

However, these funds have not found many opportunities to invest despite the huge potential market.

“We have been seeking firms in e-commerce to invest in during the past two years, but no firm has satisfied us,” said Trung.

According to Trung, DFJ VinaCapital will launch a new fund bigger than its $32 million one in June, 2011.

The proportion of finance used to invest into the general internet sector will be tantamount to the present one, at about 20 to 25 per cent. But, he declined to release the amount of finance to be poured into e-commerce.

“It is rather difficult to find a good company specialising in e-commerce to invest. Hence, we would like to work with e-commerce-related companies such as Nguyen Kim and The Gioi Di Dong, as they want to increase online trading,” said Trung.

According to investors, Vietnamese e-commerce websites lack differences to persuade investment funds.

“A lot of websites are born every day with just VND2 million. It is so easy. But, we need a different product when coming to a decision to invest,” Trung added.

Similar to DFJ VinaCapital, Japanese-owned CyberAgent – which invested into the Vietnam Price Joint Stock Company, has contacted a lot of Vietnamese e-commerce companies during the past two years, but has yet to invest in any.

“CyberAgent originated as an internet company. Hence, we always look at the angle of product and team management when we invest,” said CyberAgent office director Nguyen Manh Dung.

Amongst 40,000 companies that have online services, just a few of those were prestigious, said Nguyen Ngoc Diep, manager of Vietnam Price Joint Stock Company, which owns the vatgia.com website, with $12 million in trading value per month.

CyberAgent will introduce a new fund to invest into internet and content services in the Vietnam market.

A representative of IDG Venture told VIR that the fund had invested in some e-commerce-related companies that were leading e-commerce websites, such as chodientu.com and vatgia.com, but “the capacity of investing more in other e-commerce companies is not clear”. – VIR

Tags: Vietnam E-commerce